USDINR-Weekly Outlook-Venkat's Blog

FX_IDC:USDINR   U.S. Dollar / Indian Rupee
The currency pair is back to the narrow range The pair traded between 82.97 and 83.06. With both sides being protected, there is least or no action and it appears that the pair is behaving like CNY. At best we can assume that the band is marginally lowered to 82.85 83.15.

A few observations
a. Ultra-low Vols may be a huge risk and there could be sharp move happening when no one expects
b. There is divergence seen in the charts

Expect the range of 82.80 - 83.15 would hold for the week and there could be choppy moves within this range. A close outside this range requires reassessment of risk/direction and target.

A few more observations:
Continue to keep the following input for quick reference though it is repeated for the past 8 months.
• The 82.75-83.25(with error adjustments) zone is the Fib projection of July 2011 to July 2013. Alternatively, the Fib projection of the move from Jan 22(Low) to Oct 22(High) and Nov 22 low also suggest the projection as 82.92. Hence, the importance. If breached, we may see another spike towards 85.70
• As noted in our 3rd July Blog:
o A deeper correction is long overdue. The market is expecting 82.70-83.35 will be protected. If appears that the same kind of yo-yo moves may continue till one more quarter if we do not see a close below 82.70.
o The result is that it has extended to third quarter as well
o The rates remaining in a small range is not anything new for the currency pair as we could see from the quarterly charts, it has been in small ranges for almost 3-4 quarters in the past once in every three years. However, this general behavior altered after 2008

• The next couple of weeks are crucial. We will get to know if we are heading towards 82.50 or 83.50

Disclaimer: The views expressed here are personal and not connected to SYFX Treasury Foundation. The views are for learning and reference purpose only.


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